Mattie Halley v. Honeywell International Inc

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 16-2712
___________
MATTIE HALLEY; SHEM ONDITI; LETICIA MALAVE;
TEMPORARY ADMINISTRATOR OF THE ESTATE OF
SERGIO DE LA CRUZ,
On Behalf of Themselves and All Others Similarly Situated
v.
HONEYWELL INTERNATIONAL, INC.;
PPG INDUSTRIES, INC.
Maureen Chandra,
Appellant
_______________________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil Action No. 2-10-cv-03345)
District Judge: Honorable Esther Salas
______________
ARGUED: January 17, 2017
Before: AMBRO, VANASKIE, and SCIRICA,
Circuit Judges
(Filed: June 29, 2017)
Thomas Paciorkowski, Esq. [ARGUED]
P.O. Box 24182
Jersey City, NJ 07304
Rui O. Santos, Esq.
Shebell & Shebell
P.O. Box 2043
655 Shrewbury Avenue
Suite 314
Shrewsbury, NJ 07702
Counsel for Appellant
Allan Kanner, Esq.
Elizabeth B. Petersen, Esq.
Kanner & Whiteley
701 Camp Street
New Orleans, LA 70130
Ned I. Miltenberg, Esq.
National Legal Scholars Law Firm
5410 Mohican Road
Suite 200
Bethesda, MD 20816
2
Anthony Z. Roisman, Esq. [ARGUED]
394 Skyline Drive
Weathersfield, VT 05156
Counsel for Appellees Mattie Halley, Shem Onditi,
Leticia Malave, and Temporary Administrator of the
Estate of Sergio De La Cruz
Michael D. Daneker, Esq.
Allyson T. Himelfarb, Esq.
Arnold & Porter Kaye Scholer
601 Massachusetts Avenue NW
Washington, DC 20001
Michael R. McDonald, Esq.
Gibbons
One Gateway Center
Newark, NJ 07102
Counsel for Appellee Honeywell International Inc.
_________________
OPINION OF THE COURT
_________________
SCIRICA, Circuit Judge.
This is an appeal from the approval of a settlement of a
Federal Rule of Civil Procedure 23(b)(3) class action arising
out of hexavalent chromium contamination in Jersey City,
3
New Jersey. The class action was brought on behalf of
property owners in several neighborhoods in Jersey City
whose homes were allegedly contaminated by byproducts
disposed of at two chromium chemical manufacturing plants.
Defendants Honeywell International, Inc., and PPG
Industries, Inc., are the successors in interest of the
manufacturing plant owners and operators. Plaintiffs asserted
common law tort claims and civil conspiracy claims for
depreciation of their property values due to the alleged
contamination, but not claims for harm other than economic
loss to property value, such as personal injury or medical
monitoring claims. The District Court certified a settlement-
only class as to the claims against Honeywell 1 and approved a
$10,017,000 settlement fund, which included an award of
costs and attorneys’ fees for plaintiffs’ counsel. Maureen
Chandra is a member of the Honeywell settlement class who
objects to various aspects of the settlement and the award of
costs and attorneys’ fees.
We conclude the class certification requirements of
Federal Rule of Civil Procedure 23(a) and (b)(3) are satisfied,
and the District Court did not abuse its discretion in
approving the settlement under Federal Rule of Civil
Procedure 23(e) and the award of attorneys’ fees under
Federal Rule of Civil Procedure 23(h). But we will remand
for the District Court to reconsider the award of costs under
Rule 23(h).
1
The settlement encompasses only the claims against
Honeywell. Litigation of the claims against PPG is ongoing.
4
I. BACKGROUND AND PROCEDURAL HISTORY
A. Chromium Production in Jersey City
This case involves two chromate chemical production
facilities in Jersey City, New Jersey. Honeywell is the
successor in interest to Mutual Chemical Company of
America, which operated a facility from 1895 to 1954 on
West Side Avenue. PPG is the successor in interest to
Pittsburgh Plate Glass Company and Natural Refining
Company, which operated a facility from 1924 to 1963 on
Garfield Avenue.
Both facilities created chromium ore processing
residue (“COPR”) as a byproduct of chemical manufacturing.
COPR waste from the facilities was disposed of at two sites in
Jersey City. Mutual disposed of COPR at a site near its plant
on the west side of Jersey City, near the Hackensack River
(“the Mutual site”). Pittsburgh Plate Glass disposed of COPR
near its plant further east (“the Pittsburgh Plate Glass site”).
Plaintiffs allege more than one million tons of waste products
were disposed of at the two sites.
COPR contains hexavalent chromium,2 which the
United States Environmental Protection Agency and the New
Jersey Department of Environmental Protection classify as a
known human carcinogen. Hexavalent chromium is
2
The element chromium exists in multiple stable oxidation
states in nature. Trivalent chromium, or Cr(III), is the most
stable and found in trace amounts in the human body.
Hexavalent chromium, or Cr(VI), is unstable and causes
potentially harmful reactions in human cells.
5
hazardous to humans and other organisms if inhaled or
ingested in contaminated water.
Honeywell and its predecessors in interest have been
proceeding with COPR cleanup at the Mutual site for many
years. See Interfaith Community Org. v. Honeywell Int’l, Inc.,
399 F.3d 248 (3d Cir. 2005). The State of New Jersey first
sought a remedy for the site in 1982, after chromium waste
was discovered in surface water on the site. Id. at 252. Over
the course of ongoing negotiations with NJDEP, Honeywell
and its predecessors attempted various interim remediation
measures, including capping parts of the site with asphalt and
a plastic liner. Id. at 253. There have been a number of
consent orders regarding the Honeywell site arising from
litigation brought by NJDEP under New Jersey environmental
protection statutes and regulations in the New Jerseys state
courts, beginning with a 1990 consent order, and most
recently a 2011 consent judgment, as modified in 2013.3
In 1995, a community organization and its members
brought a federal action against Honeywell and other
defendants to compel cleanup of the Mutual site under the
citizen suit provision of the Resource Conservation and
Recovery Act, 42 U.S.C. § 6972(a)(1)(B). Id. at 252. The
United States District Court for the District of New Jersey
determined Honeywell was required to remediate under
RCRA and directed Honeywell to excavate and remove
chromium waste from the Mutual site under the supervision
of a federal-court-appointed site administrator. See id. at 268
3
The state consent judgments are made available by the New
Jersey Department of Environmental Protection.
http://www.nj.gov/dep/srp/siteinfo/chrome/
6
(affirming injunction against Honeywell to compel cleanup of
Mutual site).
B. Procedural History
This action involves three putative classes of property
owners in Jersey City in three different neighborhoods near
the chromium manufacturing plants and related disposal sites.
Class A includes property owners in a neighborhood east and
south of the Mutual site. Class C includes property owners
located in a smaller area west of Class A. Together, Class A
and Class C include 3,497 properties. The neighborhood
comprising Class B is in a different part of Jersey City, to the
east of Class A and surrounding the Pittsburgh Plate Glass
site to the north.
Plaintiffs allege both defendants negligently disposed
of COPR and other chromium manufacturing byproducts,
resulting in continuing contamination of the surrounding
properties. They further allege Honeywell, PPG, and their
predecessors, individually and in conspiracy with one
another, concealed the fact of COPR disposal and the known
health risks resulting from the disposal.
The Sixth Amended Complaint asserted five causes of
action on behalf of the three putative classes: (1) private
nuisance, (2) strict liability, (3) trespass, (4) negligence, and
(5) civil conspiracy.4 Plaintiffs sought compensatory relief in
the form of economic damages “for loss of property value,”
as well as punitive damages.
4
Plaintiffs also initially asserted claims for medical
monitoring, which were withdrawn.
7
Plaintiffs initially filed this action in New Jersey state
court in 2010, and defendants removed the case to the United
States District Court for the District of New Jersey. On
February 28, 2011, the District Court granted in part and
denied in part Honeywell’s motion to dismiss, and the case
proceeded to discovery. On July 17, 2014, prior to the
completion of discovery or filing of a motion for class
certification, plaintiffs and Honeywell informed the District
Court they had reached a settlement in principle following
negotiations under the auspices of an independent third-party
mediator.
On November 7, 2014, plaintiffs and Honeywell filed
a motion for preliminary approval of the class action
settlement. The District Court granted the motion on May 1,
2015, and certified two classes for settlement purposes,
comprising Class A and Class C. The District Court also
appointed class counsel and approved the proposed claims
administrator and form of notice.
Following notice to the class, the District Court
received three objections from four class members, and
twenty-eight opt-out requests. Maureen Chandra was one of
the objectors.
After the close of the objections period, on September
3, 2015, plaintiffs and Honeywell filed a motion for final
approval of the class action settlement. Chandra filed a brief
in opposition to the joint motion for settlement approval. On
September 25, 2015, the District Court held a fairness hearing
on the proposed settlement under Federal Rule of Civil
Procedure 23(e)(2), at which Chandra made an appearance
8
through counsel. On April 26, 2016, the District Court, as
outlined below, certified the class for settlement purposes
under Rule 23(a) and (b), granted final approval of the
settlement as fair and reasonable under Rule 23(e), and
approved plaintiffs’ counsel’s motion for costs and attorneys’
fees under Rule 23(h). See Halley v. Honeywell Int’l, Inc.,
Civil Action No. 10-3345, 2016 WL 1682943 (D.N.J. April
26, 2016).
Chandra filed this appeal.5 Chandra does not dispute
the District Court’s conclusions with respect to the
requirements of Rule 23(a) and (b). But Chandra argues the
District Court abused its discretion in finding the settlement
fair and reasonable under Rule 23(e) and in awarding
plaintiffs’ counsel attorneys’ fees and costs under Rule 23(h).
C. Proposed Settlement
The settlement provides a $10,017,000.00 non-
reversionary settlement fund for residential property owners
in Class A and Class C to include payments to class members,
incentive awards for class representatives, litigation costs,
attorneys’ fees, and fund administration expenses. The final
breakdown of those payments is as follows:
Total Fund $10,017,000.00
5
The District Court had jurisdiction under the Class Action
Fairness Act, 28 U.S.C. § 1332(d), because there is minimal
diversity between the plaintiffs and Honeywell; there are at
least 100 class members; and the amount in controversy
exceeds $5,000,000. We have jurisdiction over the District
Court’s final order approving the settlement under 28 U.S.C.
§ 1291.
9
Incentive Awards $20,000.00
Litigation Costs $1,140,023.77
Attorneys’ Fees $2,504,250.00
Fund Administration $219,278.87
Expenses
Settlement Class Funds $6,133,447.36
The two settlement classes include 3,497 properties,
entitled to $1,745 per potential claimant. Valid claims were
submitted on behalf of 2,085 properties, and the unclaimed
funds will be distributed pro rata to valid claimants. Thus, the
final allocation per property is $2,926.
II. CLASS CERTIFICATION
To approve a class action settlement, a district court
must determine the requirements for class certification of
Federal Rule of Civil Procedure 23(a)6 and (b)7 are met.
Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 619–20
(1997). The proposed settlement may be taken into
6
The Rule 23(a) requirements are (1) numerosity, (2)
commonality, (3) typicality, and (4) adequacy. Fed. R. Civ. P.
23(a); Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613
(1997).
7
In addition to the Rule 23(a) requirements, which apply to
all class actions, parties seeking class certification must also
show the action is maintainable under Rule 23(b)(1), (2), or
(3). Only Rule 23(b)(3) is at issue in this case, which imposes
the additional requirements of (1) predominance and (2)
superiority. Amchem, 521 U.S. at 615.
10
consideration when evaluating whether these requirements
are met. Id.; In re Prudential Ins. Co. America Sales Practice
Litig. Agent Actions, 148 F.3d 283, 308 (3d Cir. 1998). We
review the District Court’s decision to certify a class for
settlement purposes for an abuse of discretion. Prudential,
148 F.3d at 299.
The District Court determined the proposed settlement
classes should be certified after concluding the requirements
of Rule 23(a) and (b) were met. With respect to Rule 23(a),
the Court concluded joinder of the owners of the 3,497
properties in Classes A and C would be impractical. See
Stewart v. Abraham, 275 F.3d 220, 226–27 (3d Cir. 2001).
Second, the Court determined questions of fact relating to
operation of the Mutual plant and subsequent remediation
satisfied the commonality requirement. Third, the Court
concluded the class representatives of Class A and Class B
satisfied the typicality requirement through their contention
that their respective properties have been adversely affected
by COPR contamination resulting from Honeywell’s conduct.
Fourth, the Court determined class counsel was qualified to
adequately represent the class, and the interests of the class
representatives were adequately aligned with the other class
members because they allegedly suffered the same harm
through COPR contamination of their property and they seek
the same remedy.
The District Court also found the requirements of Rule
23(b)(3) were met.
The predominance requirement was satisfied because
common issues relating to the generation, disposal, and
failure to remediate COPR, and Mutual and Honeywell’s
11
knowledge of and negligence with respect to the effects of
COPR disposal predominated over any individual issues. The
Court determined the superiority requirement was met
because the class action device achieved significant
efficiencies compared to individual actions.
As noted, none of the objectors raised any issues with
respect to Rule 23(a) and (b), and Chandra does not dispute
these conclusions in this appeal. We conclude the District
Court’s findings were well within its sound discretion.
III. FAIRNESS OF THE PROPOSED SETTLEMENT
Federal Rule of Civil Procedure 23(e) provides “the
claims . . . of a certified class may be settled . . . only with the
court’s approval.” “Even if it has satisfied the requirements
for certification under Rule 23, a class action cannot be
settled without the approval of the court and a determination
that the proposed settlement is fair, reasonable and adequate.”
Prudential, 148 F.3d at 316 (quotation omitted). When the
parties seek simultaneous class certification and settlement
approval, courts must “be even more scrupulous than usual
when they examine the fairness of the proposed settlement.”
Id. at 317 (quotation omitted). The ultimate decision whether
to approve a proposed settlement under this standard “is left
to the sound discretion of the district court.” Id. at 299. “An
appellate court may find an abuse of discretion where the
district court’s decision rests upon a clearly erroneous finding
of fact, an errant conclusion of law or an improper application
of law to fact.” Id. (quotations omitted).
We have articulated a number of factors to guide
district courts in the exercise of their discretion to approve
12
class action settlements. In Girsh v. Jepson, we identified
nine nonexclusive factors:
(1) the complexity, expense, and likely duration
of the litigation; (2) the reaction of the class to
the settlement; (3) the stage of the proceedings
and the amount of discovery completed; (4) the
risks of establishing liability; (5) the risks of
establishing damages; (6) the risks of
maintaining the class action through the trial;
(7) the ability of the defendants to withstand a
greater judgment; (8) the range of
reasonableness of the settlement fund in light of
the best possible recovery; and (9) the range of
reasonableness of the settlement fund to a
possible recovery in light of all the attendant
risks of litigation.
521 F.2d 153, 157 (3d Cir. 1975) (quotations and alterations
omitted). In Prudential, we expanded the Girsh factors, to
include, when appropriate, additional nonexclusive factors:
[1] the maturity of the underlying substantive
issues, as measured by experience in
adjudicating individual actions, the
development of scientific knowledge, the extent
of discovery on the merits, and other factors
that bear on the ability to assess the probable
outcome of a trial on the merits of liability and
individual damages; [2] the existence and
probable outcome of claims by other classes
and subclasses; [3] the comparison between the
results achieved by the settlement for individual
13
class or subclass members and the results
achieved—or likely to be achieved—for other
claimants; [4] whether class or subclass
members are accorded the right to opt out of the
settlement; [5] whether any provisions for
attorneys' fees are reasonable; and [6] whether
the procedure for processing individual claims
under the settlement is fair and reasonable
148 F.3d at 323.8
A. District Court Opinion
After careful consideration of each Girsh factor, the
District Court determined the settlement was fair and
adequate. Specifically, the Court concluded the first Girsh
factor, the complexity, expense, and likely duration of
litigation, weighed heavily in favor of settlement. The parties
litigated a motion to dismiss followed by five years of
discovery, but expert reports had not been exchanged, expert
depositions had not been taken, and motions for class
8
The American Law Institute has proposed streamlining and
condensing these factors to better reflect the realities of
modern aggregate litigation. See American Law Institute,
Principles of Aggregate Litigation § 3.05 (2010). In August
2016, the Judicial Conference’s Committee on Rules of
Practice and Procedure published for notice and comment
proposed amendments to the Rules of Civil Procedure. These
amendments draw support from the ALI’s recommendations
in the Principles of Aggregate Litigation and incorporate,
combine, and streamline many of the Girsh and Prudential
factors into Rule 23 itself.
14
certification had not yet been filed. The claims at issue would
involve complicated legal and technical issues at the
summary judgment stage and at trial. Based on the extensive
discovery that had already taken place, the District Court also
concluded the third Girsh factor, the stage of proceedings and
amount of discovery completed, also weighed in favor of
settlement.
The District Court determined the second Girsh factor,
the reaction of the class to the settlement, strongly weighed in
favor of settlement. Claims were submitted for 2,089 of the
3,497 properties included in Classes A and C, representing
almost 60% of the class. Only twenty-eight potential class
members opted out of the settlement and three objections
were filed. The Court concluded the “relatively minimal
number of objections and opt-outs” weighed in favor of
settlement.
With respect to the fourth and fifth Girsh factors, the
risks of establishing liability and damages, the Court
concluded there were litigation risks for both plaintiffs and
defendants. First, the Court noted class certification had not
yet been litigated and that there was some risk of failure for
plaintiffs at that stage. Second, with respect to the merits, the
Court explained there were substantial risks for both parties.
In plaintiffs’ favor, if liability were established, the alleged
COPR contamination would result in significant diminution
of property values and a large damages award. But defendants
strongly contested liability.
In particular, the Court noted defendants’ contention
that none of the COPR disposed of at either site had actually
migrated onto or otherwise contaminated the plaintiffs’
15
properties. The Court explained, “Honeywell contends that
any fear or concern regarding the presence of chromium from
the Mutual sites is not reasonable and is contradicted by other
discovery obtained in the case; these and other issues, like
causation and injury, present substantial obstacles for
certifying a litigation class.” Plaintiffs conducted no
independent testing of class properties to determine if ground
contamination existed due to COPR migration from the
Mutual site, and Honeywell planned to offer expert testimony
that no migration had occurred.
In addition, Honeywell took the position during
litigation that the claims were time-barred given the long and
well-publicized history of cleanup at the contaminated
production sites. The applicable statute of limitations for
claims of tortious injury to real property in New Jersey is six
years. See N.J.S.A. 2A:14-1. The Court noted “Honeywell
argues that considerable evidence of public awareness of the
chromium issue in Jersey City may preclude plaintiffs’ claims
based on statute of limitations grounds.” The litigation
brought by NJDEP to force cleanup of the chromium
manufacturing sites dated back to the 1980s, and was well
publicized in Jersey City.
On balance, the District Court concluded there were
serious questions as to liability and that a jury calculating
damages would be presented with contrasting expert
testimony. Because of the uncertainty with regard to class
certification for litigation, and also with regard to liability and
damages, the Court concluded the fourth and fifth Girsh
factors weighed in favor of settlement.
The Court found the sixth Girsh factor, the risk of
16
maintaining the class action through trial, was neutral because
there were no issues raised by any party that might have led
to decertification. With respect to the seventh Girsh factor,
defendant’s ability to withstand a greater judgment, the Court
concluded Honeywell would have been able to withstand a
larger settlement, and this factor weighed against the
settlement. But the Court concluded the seventh factor was of
relatively little importance in context because the settlement
achieved immediate and tangible benefit for the class.
In addition, the District Court considered and rejected
a challenge to the scope of the release of claims. Chandra
argued the eighth and ninth Girsh factors could not be
properly evaluated because of the release of “unknown” and
“unforeseen” claims. Rejecting this contention, the Court
reasoned the release of future, unknown claims was a
necessary part of the bargain to obtain the benefits of the
settlement for the class. The Court noted the settlement did
not prevent class members from seeking remediation of their
properties in the future through the administrative procedures
of the New Jersey Spill Act, N.J.S.A. § 58:10-23.11, which
require an entity who discharges a hazardous substance to
remediate the contamination regardless of fault.
Finally, the District Court determined the eighth and
ninth Girsh factors, the range of reasonableness of the
settlement in light of the best possible recovery and possible
recovery in light of all of the attendant risks of litigation,
weighed in favor of settlement. In so doing, the Court noted
the settling parties had not identified a specific dollar amount
for a best possible recovery. But the Court explained
determining the best possible recovery, without completion of
fact and expert discovery, would “risk either being
exceedingly speculative—or exceedingly burdensome by
17
compelling litigation to continue . . . .” The Court concluded
the information that was available, in the form of contrasting
studies and proffered expert testimony, demonstrated
conflicting valuations of the case. Without the ability to place
a value on the best possible recovery, the Court’s analysis of
the eighth and ninth Girsh factors relied on its determination
that the settlement “yields immediate and tangible benefits,
and it is reasonable in light of the best possible recovery and
the attendant risks of litigation—little or no recovery at all.”
Halley, 2016 WL 1682943, at *15 (quoting Varacallo v.
Mass. Mut. Life Ins. Co., 226 F.R.D. 207, 240 (D.N.J. 2005).
Ultimately, the District Court concluded the settlement was
fair and reasonable under Rule 23(e) because the Girsh
factors weighed in favor of approval of the settlement.
Chandra raises four issues with respect to the Court’s
approval of the settlement under Rule 23(e). First, Chandra
argues the Court abused its discretion in approving the
settlement without a record establishing the presence and
extent of COPR contamination on class members’ properties.
Second, she contends the Court committed clear error in what
she characterizes as the factual finding that class members
could still seek remediation of their properties through
administrative proceedings under the New Jersey Spill Act,
N.J.S.A. 58:10-23.11 et seq. Third, she claims the Court
abused its discretion because the settlement releases
“unknown” and “unforeseen” future claims. Finally, she she
asserts the Court abused its discretion in failing to consider
the negative reaction of class members at a public meeting
held by class counsel. After reviewing each of these
arguments and for the reasons we explain, we conclude the
District Court exercised sound discretion in approving the
settlement under Rule 23(e) and will affirm the approval of
18
the settlement.
While the amount of the recovery for each class
member appears troubling in light of the likely diminution of
property values should liability be proved, five years of
extensive fact discovery produced little evidence suggesting
that liability could be established. This case involves only
claims for diminution of property value due to COPR
contamination, and personal injury or medical monitoring
claims are not released in this settlement. Plaintiffs had
conducted no testing to determine the extent, if any, of
ground contamination of the class properties. Thus, the
evidence of injury in the form of ground contamination was
nonexistent or limited at best. The studies relied on by
plaintiffs involved dust contamination in areas near the
mutual site, but plaintiffs had limited evidence that the dust
contamination was caused by COPR disposal at the Mutual
site. Even if plaintiffs could establish injury and causation,
the statute of limitations posed a formidable hurdle, given that
the existence of COPR contamination at the Mutual site had
been known for decades and the applicable statute of
limitations was six years.
Plaintiffs likely realized it would be difficult to prove
injury and causation and to surmount the statute of
limitations. For its part, Honeywell, which continues to be
responsible for cleanup and remediation at the Mutual site
itself, was willing to pay $10 million dollars to avoid further
litigation in this case. For these reasons, we agree with the
District Court that the settlement “yields immediate and
tangible benefits, and it is reasonable in light of the best
possible recovery and the attendant risks of litigation—little
or no recovery at all.”
19
B. Sufficiency of Record
Chandra argues the Court abused its discretion in
approving the settlement without expert testimony regarding
the presence and extent of COPR contamination on the
properties in Class A and Class C. As noted, none of the
experts retained by plaintiffs’ counsel conducted tests of any
class property for COPR contamination.
Chandra relies on our decision in In re Pet Food
Products Liability Litigation. 629 F.3d 333 (3d Cir. 2010). In
that case, we considered a proposed settlement of claims
brought on behalf of a class of purchasers of tainted pet food.
Id. at 336. The putative class was divided into several
subclasses, including a subclass for purchasers of the tainted
pet food who had not already received a refund from the
retailers or manufacturers. Id. at 353. The settlement capped
the total recovery for this purchaser subclass at $250,000. Id.
But the settling parties produced no information to support
their contention the $250,000 cap was sufficient to cover all
of the possible claims in the purchaser subclass. Id. at 353–
54. Because the parties did not supply information to explain
how the $250,000 cap was calculated, the District Court was
unable to conduct an analysis of the Girsh factors as applied
to that subclass. Id. at 354. We reversed the approval of the
settlement as to only the purchaser subclass and concluded
“where funds available for some claims are capped while
others are not[,] the settling parties should have provided the
court with more detailed information about why they settled
on the $250,000 cap.” Id.
Pet Food Products also considered the District Court’s
analysis of the eighth and ninth Girsh factors—the range of
20
reasonableness of the settlement fund in light of the best
possible recovery for the class and in light of the risks of
litigation. Id. at 354–55. We explained “‘in cases primarily
seeking monetary relief,’ district courts should compare ‘the
present value of the damages plaintiffs would likely recover if
successful, appropriately discounted for the risk of not
prevailing[,] . . . with the amount of the proposed
settlement.’” Id. at 354 (quoting In re General Motors Corp.
Pick-Up Truck Tank Prods. Liability Litig., 55 F.3d 768, 806
(3d Cir. 1995) (quoting Manual for Complex Litigation
(Second) § 30.44, at 252 (1985))). The settling parties did not
provide estimations of the best possible recovery for the
purchaser subclass, in particular “information identifying the
amount of recalled pet food sold to consumers and the
amount of refunds already paid to customers.” Id. at 355. We
explained this best recovery was relevant because it would
have enabled the District Court to “make the required value
comparisons and generate a range of reasonableness to
determine the adequacy of the settlement amount.” Id. (citing
Warfarin, 391 F.3d at 538).
At issue in Pet Food Products was that the parties had
not indicated to the District Court whether the information
regarding the purchaser subclass existed. Id. We explained it
might not be possible in every case to “reduce the final Girsh
factors ‘to a concrete formula.’” Id. at 355 n.30 (quoting
Prudential, 148 F.3d at 322). We expressed no opinion, in the
absence of a record, as to whether it would have been
possible to calculate the best possible recovery for the
purchaser subclass, and directed the District Court on remand
to consider whether such a calculation would be possible
based on additional information from the settling parties. Id.
21
This case is distinguishable from Pet Food Products.
Here, the parties presented the Court with a number of studies
relating to COPR contamination in Jersey City, which put
forth conflicting views on the extent of contamination and
migration. The District Court determined the information
available was not sufficient to put a value on the claims, but
also that determining the value of the claims would have
required trying the merits of the case in the context of a
settlement approval hearing. Based on the conflicting studies
before it, the Court determined that it was possible to evaluate
the reasonableness of the settlement in light of the possible
recovery and litigation risks, and that the settlement provided
substantial benefits for the class considering the risks.
The District Court did not abuse its discretion in
approving the settlement without specifically identifying the
best possible recovery for the class. As we have explained,
“precise value determinations are not required” in evaluating
a class action settlement. Pet Food Products, 629 F.3d at 355.
The calculations required by the eighth and ninth Girsh
factors—valuation of the best possible recovery and
depreciation of that recovery for the risks of litigation—are
fact-specific inquiries that must be tailored to the nature of
the claims and the record developed in discovery. In some
cases, like the consumer claims in Pet Food Products, it may
be feasible to determine the aggregate value of the class’s
claims through the use of sales information as in that case or
other readily available data. In other cases, litigation may
have progressed through expert discovery, allowing the
parties to present estimates based on expert testimony. See
Warfarin, 391 F.3d at 538.
But in a case such as this, where valuation of
22
plaintiffs’ claims is difficult or impossible without expert
testimony, and expert reports have not been exchanged or
depositions taken, the District Court need not delay approval
of an otherwise fair and adequate settlement if it has
sufficient other information to judge the fairness of the
settlement. Cf. General Motors, 55 F.3d at 806 (“The
evaluating court must . . . guard against demanding too large
a settlement based on its view of the merits of the litigation;
after all, settlement is a compromise, a yielding of the highest
hopes in exchange for certainty and resolution.”). District
courts may approve settlements in which “calculating the best
possible recovery for the class in the aggregate would be
‘exceedingly speculative’” if the reasonableness of the
settlement nevertheless can be “fairly judged.” Prudential,
148 F.3d at 322. To conclude otherwise might risk requiring
parties to continue to litigate cases unnecessarily after a fair
settlement has been reached. In this case, we believe the
District Court ably exercised its discretion in evaluating the
eighth and ninth Girsh factors based on the record.
C. Remediation through the Spill Act
In its analysis of the eighth and ninth Girsh factors, the
District Court explained the release of claims in the
settlement “does not require giving up [the] ability to obtain
remediation all together . . . .” The settlement does not affect
claims for remediation under the New Jersey Spill Act,
N.J.S.A. § 58:10-23.11 et seq. The Spill Act authorizes the
New Jersey Department of Environmental Protection to direct
cleanup of hazardous waste spills and recover the costs of
cleanups from the discharger. See N.J.S.A. § 58:10-
23
23.11f(a).9
Chandra argues the District Court’s conclusion
remediation was available through the Spill Act was a factual
finding that represented clear error because in practice
administrative proceedings under the Spill Act can take years
to resolve. Chandra relies on the decision of the United States
District Court for the District of New Jersey in earlier
litigation against Honeywell relating to COPR cleanup in
Jersey City. See Interfaith Community Org. v. Honeywell
Intern., Inc., 263 F. Supp. 2d 796 (D.N.J. 2003). In that case,
the Court observed Honeywell delayed administrative
proceedings under the Spill Act relating to the Mutual site. Id.
at 826.
Chandra’s reliance on this decision is misplaced. First,
remediation remains available under the terms of the Spill
Act, and homeowners may still seek remediation through
NJDEP. Second, the District Court did not commit clear error
or abuse its discretion when it concluded that Honeywell’s
actions more than fifteen years ago were not dispositive of the
present case. For these reasons, it was not clear error or an
abuse of discretion for the Court to consider the availability
9
The Spill Act provides “[w]henever any hazardous
substance is discharged,” NJDEP “may, in its discretion, act
to clean up and remove or arrange for the cleanup and
removal of the discharge or may direct the discharger to clean
up and remove, or arrange for the cleanup and removal of, the
discharge.” N.J.S.A. § 58:10-23.11f(a). The Spill Act
authorizes NJDEP to identify “hazardous substances.” See
N.J.S.A. § 58:10-23.11(b). NJDEP identifies both chromium
and “chromium compounds” in its environmental hazardous
substance list.
24
of remediation under the Spill Act in evaluating the fairness
of the settlement.
D. Release of “Unknown” and “Unforeseen” Claims
Chandra argues the Court abused its discretion in
approving the settlement because it releases “unknown” and
“unforeseen” claims. She contends the release in the
settlement is overbroad. In addition, Chandra objects to the
release of claims relating to “in ground” contamination, as
opposed to claims arising out of contamination by air-borne
chromium dust.
It is not unusual for a class settlement to release all
claims arising out of a transaction or occurrence. “[A]
judgment pursuant to a class settlement can bar later claims
based on the allegations underlying the claims in the settled
class action.” In re Prudential Ins Co. of America Sales
Practice Litig. (Prudential II), 261 F.3d 355, 366 (3d Cir.
2001). “[W]e have endorsed the rule because it serves the
important policy interest of judicial economy by permitting
parties to enter into comprehensive settlements that prevent
relitigation of settled questions at the core of a class action.”
Id. (quotations omitted). Accordingly, the scope of the release
is an important consideration in evaluating whether a
settlement is fair and adequate under Rule 23(e). See Pet
Food Products, 629 F.3d at 356.
In this case, the settlement releases
all claims stemming from any and all manner of
actions, causes of action, suits, debts,
judgments, rights, demands, damages,
25
compensation, injuries to business, loss of use
and enjoyment of property, expenses, attorneys'
fees, litigations costs, other costs, rights or
claims of reimbursement of attorneys [sic] fees
and claims of any kind or nature whatsoever
arising out of the ownership of 1-4 family
residential property in Settlement Class A area
or Settlement Class C area including without
limitation punitive damages, in either law or
equity, under any theory of common law or
under any federal, state, or local law, statute,
regulation, ordinance, or executive order that
the Class Member ever had or may have in the
future, whether directly or indirectly, that arose
from the beginning of time through the
execution of this Agreement, WHETHER
FORESEEN OR UNFORESEEN, OR
WHETHER KNOWN OR UNKNOWN TO
ALL OR ANY OF THE PARTIES, that arise
out of the release, migration, or impacts of
COPR, hexavalent chromium, or other chemical
contamination (a) originating from the Mutual
Facility at any time or (b) present on or
migrating at or from Study Area 5, Study Area
6 South, Study Area 6 North, Study Area 7, or
Site 119 at any time and into the future,
including but not limited to property damage,
remediation costs, business expenses,
diminution of value to property, including
stigma damages, loss of use and enjoyment of
property, fear, anxiety, or emotional distress as
a result of the alleged contamination. Released
Claims include claims for civil conspiracy
26
asserted by the members of Settlement Classes
A and C. Personal injury, bodily injury, and
medical monitoring claims (if any) are not
Released Claims.
As explained earlier, it is important to note that the
release in this case affects only claims for economic loss due
to diminution of property value, not personal injury or
medical monitoring claims. The District Court carefully
considered the scope of the release in relation to the claims
asserted in its evaluation of the Girsh factors and concluded
the settlement was a fair and adequate release of all COPR-
contamination-related claims for diminution of property
values, in light of the potential recovery and the litigation
risk. Although plaintiffs did not test individual properties in
the settlement class for chromium contamination, and the
studies relied on by the District Court relate to airborne
COPR dust contamination, as opposed to “in ground”
contamination with COPR-containing fill, the District Court
had a substantial record on issues relating to chromium
contamination and the claims generally. The Court evaluated
the litigation risks based on causation and statute of
limitations issues applicable to all claims.
The thrust of Chandra’s objection is the amount of
evidence before the District Court when approving the
settlement was insufficient. We have required the District
Court have evidence on which to base its evaluation of the
Girsh factors. See Pet Food Products, 629 F.3d at 350–51
(“[T]he court cannot substitute the parties' assurances or
conclusory statements for its independent analysis of the
settlement terms.”). The determination of whether the record
supports approval of the settlement and the release is a fact-
27
specific inquiry that is within the sound discretion of the
District Court. Id. at 351.
We are satisfied the District Court did not abuse its
discretion in approving the settlement that included the
release of “unknown” and “unforeseen” claims and ground
contamination claims. Presented with a record developed over
five years of fact discovery, the District Court was in the best
position in the first instance to evaluate the fairness of the
settlement vis-à-vis the scope of the release. Moreover, the
District Court’s evaluation of the litigation risk was based on
legal and factual issues common to all claims, specifically the
lack of evidence of migration, causation issues, and the
statute of limitations, regardless of factual differences
between the different types of COPR contamination alleged.
The District Court did not abuse its discretion in finding the
scope of the release not overbroad given the substantial and
immediate recovery for the class and the risks and costs of
continued litigation.
E. Class Reaction at July 22, 2015, Meeting
Chandra argues the District Court abused its discretion
in evaluating the second Girsh factor—the reaction of the
class to the settlement—by failing to consider the reaction of
class members at a July 22, 2015, meeting with class counsel.
No formal record of the July 22, 2015, meeting, which
occurred prior to the close of the opt-out and objection period,
was kept and no informal records of the meeting were entered
in evidence at the fairness hearing.
In this case, the District Court rested its conclusion on
the second Girsh factor on the very small number of
28
objections and opt-outs relative to the class and the large
number of valid claims submitted. Only twenty-eight class
members opted out, a rate of less than 1%, and just three class
members filed objections.
A district court is not limited to formal objections and
opt-outs in considering the reaction of the class under the
second Girsh factor. See General Motors, 55 F.3d at 812–
813. We have previously explained other evidence may be
relevant to the analysis, including polling of the class. Id. And
“vociferous” objections from a small minority of class
members may overcome a presumption of acceptance by a
silent majority. Id.
The settling parties point out that there is no evidence
in the record to support the allegations made by Chandra
about what occurred at the July 22, 2015, meeting. Assuming
arguendo the allegations were supported by the record, they
would nonetheless be outweighed by the other evidence of
class reaction relied on by the District Court. The July 22,
2015, meeting occurred before the end of the objection and
opt-out period. Thus, any negative reaction of the class at the
meeting was not reflected in the formal objections and opt-
outs. The informal reactions at the meeting in this case are
insufficient to overcome the presumption created by the small
number of objections and opt-outs, particularly because each
class member received direct notice by mail and there is no
reason to suspect class members were not aware of the
objection process. For these reasons, the District Court did
not abuse its discretion in concluding the second Girsh factor
favored settlement notwithstanding the alleged events at the
July 22, 2015, meeting.
29
IV. ATTORNEYS’ FEES AND COSTS
Federal Rule of Civil Procedure 23(h) provides “[i]n a
certified class action, the court may award reasonable
attorney’s fees . . . that are authorized by law or by the
parties’ agreement.” “A thorough judicial review of fee
applications is required for all class action settlements.”
Prudential, 148 F.3d at 333 (quotations omitted). “The
standards employed calculating attorneys’ fees awards are
legal questions subject to plenary review, but the amount of a
fee award is within the district court’s discretion so long as it
employs correct standards and procedures and makes findings
of fact not clearly erroneous.” In re Rite Aid Corp. Securities
Litig., 396 F.3d 294, 299 (3d Cir. 2005) (quotations and
alterations omitted).
Common fund cases, such as this case, are generally
evaluated using a “percentage-of-recovery” approach,
followed by a lodestar cross-check. Sullivan v. DB
Investments, Inc., 667 F.3d 273, 330 (3d Cir. 2011). The
percentage-of-recovery approach compares the amount of
attorneys’ fees sought to the total size of the fund. Id. The
lodestar method “multiplies the number of hours counsel
worked on the case by a reasonable hourly billing rate for
such services,” and compares that amount to the attorneys’
fees sought. Id. (quotation omitted). We have identified
several factors to consider in determining whether attorneys’
fees are reasonable under the percentage-of-recovery
approach, including, inter alia, “(1) the size of the fund
created and the number of persons benefitted; (2) the presence
or absence of substantial objections by members of the class
to the settlement terms and/or fees requested by counsel; (3)
the skill and efficiency of the attorneys involved; (4) the
30
complexity and duration of the litigation; (5) the risk of
nonpayment; (6) the amount of time devoted to the case by
plaintiffs’ counsel; and (7) the awards in similar cases,”
Gunter v. Ridgewood Energy Corp., 223 F.3d 190, 195 n.1
(3d Cir. 2000), and “(8) the value of benefits attributable to
the efforts of class counsel relative to the efforts of other
groups, such as government agencies conducting
investigations, (9) the percentage fee that would have been
negotiated had the case been subject to a private contingent
fee arrangement at the time counsel was retained, and (10)
any innovative terms of settlement.” In re Diet Drugs, 582
F.3d 524, 541 (3d Cir. 2009) (citing Prudential, 148 F.3d at
338–40).
With respect to costs, Rule 23(h) authorizes recovery
of “nontaxable costs that are authorized by law or by the
parties’ agreement” (emphasis added). Rule 23(h) does not
expressly authorize an award of taxable costs, e.g., the costs
enumerated in 42 U.S.C. § 1920. Such taxable costs “shall be
allowed to the prevailing party” under Rule 54(d)(1). But we
have previously concluded an attorney who creates a common
fund through settlement of a class action under Rule 23 may
recover all of the costs of litigation, including taxable costs.
See General Motors, 55 F.3d at 820 n.39 (“The common fund
doctrine provides that a private plaintiff, or plaintiff’s
attorney, whose efforts create, discover, increase, or preserve
a fund to which others also have a claim, is entitled to recover
from the fund the costs of his litigation . . . .”); cf. Alyeska
Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 257
(1975) (explaining “the historic power of equity to permit . . .
a party . . . recovering a fund for the benefit of others in
addition to himself, to recover his costs, including his
attorneys' fees, from the fund or property itself or directly
31
from the other parties enjoying the benefit.”).
In the context of a common fund created by settlement
of a class action under Rule 23, a district court may evaluate
taxable and nontaxable costs together in the context of a
petition for costs. While the authority for the award of each
type of costs is different, Rule 23(h) for nontaxable costs and
Rule 54(b) for taxable costs, each reduce the recovery of
absent class members when deducted from the common fund
and may be considered together by the court in reviewing a
proposed settlement.
We review the District Court’s decision to award costs
for an abuse of discretion. See In re AT&T Corp., 455 F.3d
160, 163–64 (3d Cir. 2006). An award of costs in a common
fund case must be subject to the same “thorough judicial
review” as an award of attorneys’ fees, because costs, like
fees, reduce the recovery of the absent class members. See
Prudential, 148 F.3d at 333. As with attorneys’ fees, “it is
incumbent upon a district court to make its
reasoning . . . clear, so that we, as a reviewing court, have a
sufficient basis to review for abuse of discretion.” Gunter,
223 F.3d at 196.
A. District Court Opinion
Plaintiffs’ counsel sought $2,504,250 in attorneys’
fees, $1,140,023.77 in costs, $219,278.87 in claims
administration expenses, and $20,000 in incentive awards for
the two class representatives.
The District Court conducted a thorough percentage-
of-recovery analysis applying the Gunter and Prudential
32
factors. The Court concluded each factor weighed in favor of
approval of the award of attorneys’ fees, and found, inter alia,
that the $6,133,447.36 net recovery for the class, the
complexity and duration of the litigation, the risks of
nonpayment due to the liability and damages issues, and the
time and skill devoted to the litigation favored approval of the
fees. In addition, the Court found the $2,504,250 in fees,
roughly 25% of the total fund, was reasonable in light of fee
awards in other cases and what would have been negotiated
as a contingent fee in the marketplace. The Court then
conducted a lodestar crosscheck based on time records
submitted by plaintiffs’ counsel and determined the lodestar
fee was $9,455,475.66, based on a blended billable rate of
$342.11. The Court determined the requested fees of
$2,504,250 was reasonable in light of this lodestar.
In addition, the Court approved the award of taxable
and nontaxable costs,10 based on an in camera review of
10
Specifically, the costs included
fees for experts or consultants in various
scientific disciplines such as air transport of
contaminants, risk assessment, forensic
reconstruction, toxicology, property valuation
and economics; mediation fees and costs; the
costs associated with document management,
reviews, imaging, copying, Bates labeling and
productions; the costs associated with fact and
legal research; forensic preservation of
electronic files; court fees such as the filing of
pleadings, subpoena service, and pro hac vice
fees; discovery such as deposition transcripts
33
expense records submitted by plaintiffs’ counsel. The Court
concluded the costs were proper because they had been
“adequately documented and reasonably and appropriately
incurred in the prosecution of the case.” Halley, 2016 WL
1682943, at *27 (quoting In re Cendant Corp., Derivative
Action Litig., 232 F. Supp. 2d 327, 343 (D.N.J. 2002)).
Because the Court conducted a thorough evaluation of
the petition for fees and costs and clearly set forth its
reasoning in approving the awards, we will engage in detailed
analysis of only the issues raised by appellant.11 See Sullivan,
667 F.3d at 331. First, Chandra argues the District Court erred
in analyzing the award of attorneys’ fees based on the amount
of the recovery before deducting costs, rather than after
deducting costs, as required by New Jersey Court Rule 1:21-
7. We agree Rule 1:21-7 applies, but conclude application of
the rule had no effect on the District Court’s substantive
analysis, and thus the Court did not abuse its discretion.
Second, Chandra asserts the Court erred in not
providing detailed information regarding the attorneys’ fees
and costs request to class members until after the objection
and videos; litigation support costs associated
with copying, uploading, and analyzing
voluminous data and document collections and
costs associated with travel and lodging for
hearings, client meetings, expert meetings, site
visits, court conferences, co-counsel meetings,
document reviews, mediation and meetings with
opposing counsel.
11
Chandra does not dispute the approval of incentive awards
for the named plaintiffs.
34
period expired. Third, she claims the Court abused its
discretion in awarding costs from the Honeywell settlement
for costs incurred in litigation against PPG. With respect to
attorneys’ fees, we reject Chandra’s arguments and will
affirm. But we will remand for the District Court to
reconsider the issue of commingled costs incurred in
litigating claims against Honeywell and PPG.
B. New Jersey Court Rule 1:21-7
The District Court granted attorneys’ fees based on a
percentage of the common fund before deducting costs.
Alleging error, Chandra contends the Court was required to
apply New Jersey Court Rule 1:21-7 and evaluate the award
of attorneys’ fees as a percentage of the fund after deducting
costs.
Declining to apply Rule 1:21-7 in this case, the Court
concluded, as a matter of federal procedural law, Federal Rule
of Civil Procedure 23(h) supplanted the requirements of New
Jersey Rule 1:21-7. The Court noted “courts in this Circuit
seem to consistently award fees based on the gross recovery.”
In the alternative, the District Court concluded
application of Rule 1:21-7 did not change its evaluation of the
attorneys’ fees award as fair and reasonable. The Court found
the fee award was roughly 25% of the total fund before
deduction of costs, but only slightly more, 28% of the fund,
after deduction of the costs. The District Court found 28%
was also reasonable under the Gunter and Prudential factors.
New Jersey Court Rule 1:21-7 sets limits on
contingent fee arrangements for lawyers practicing before
35
New Jersey courts. Rule 1:21-7(c) fixes the maximum amount
of contingent fee that may be retained by an attorney based on
the total size of the recovery. But Rule 1:21-7(f) provides an
exception and allows the court, after written notice and a
hearing, to determine “a reasonable fee in light of all the
circumstances.” At issue here, Rule 1:21-7(d) provides the
permissible fee under the Rule “shall be computed on the net
sum recovered after deducting disbursements in connection
with the institution and prosecution of the
claim, . . . including investigation expenses, expenses for
expert or other testimony or evidence, the cost of briefs and
transcripts on appeal, and any interest included in a
judgment . . . .”
The United States District Court for the District of
New Jersey incorporates Rule 1:21-7’s limitations on
contingent fees in its Local Rules. Civil Local Rule
101.1(c)(4) provides “[a] lawyer admitted pro hac vice is
deemed to have agreed to take no fee in any tort case in
excess of New Jersey Court Rule 1:21-7 governing contingent
fees.”
We have previously determined “contingency fee
agreements in diversity cases are to be treated as matters of
procedure governed by federal law.” Mitzel v. Westinghouse
Elec. Corp., 72 F.3d 414, 417 (3d Cir. 1995). In Mitzel, the
parties disputed whether New Jersey or Pennsylvania’s limits
on contingent fees applied in a diversity case brought by a
Pennsylvania law firm on behalf of New Jersey clients in the
United States District Court for the District of New Jersey. Id.
at 415. The Local Rules for the District of New Jersey at that
time incorporated the New Jersey contingent fee rule as
federal procedural law through then-Local Rule 4(c), and the
36
District Court therefore applied New Jersey Rule 1:21-7’s
limitations on the maximum contingent fee. Id. We agreed
and concluded the New Jersey contingency fee limits
incorporated in the Local Rules applied as a matter of federal
procedural law. Id.
We respectfully disagree with the District Court on the
issue of Rule 1:21-7’s application to this case. Lawyers
practicing before the District Court are well aware contingent
fee agreements will be subject to the limitations of Rule 1:21-
7 as incorporated in the Local Rules. Accordingly, New
Jersey Court Rule 1:21-7, incorporated in Civil Local Rule
101.1, acts as a federal procedural rule limiting contingent fee
agreements in class actions certified under Federal Rule of
Civil Procedure 23 in the District of New Jersey.
We see no reason why the analysis under Federal Rule
of Civil Procedure 23(h) should supplant the limitations of
Rule 1:21-7 because the rules are easily harmonized in this
case. In evaluating the appropriateness of the class action
settlement under Rule 23(h), the Court considered, in the
alternative, the percentage of the recovery analysis based on
the fund after deduction of costs. As the District Court
correctly concluded, fees in this case are not limited to the
percentages set forth in Rule 1:21-7(c) because Rule 1:21-7(f)
applies and gave the court discretion to determine “a
reasonable fee in light of all the circumstances.” This
reasonableness analysis was satisfied by the “thorough
judicial review” we require of all fee awards in class action
settlements under Rule 23(h). See Prudential, 148 F.3d at
333.
In this case, the District Court’s analysis of the fee
37
award under Rule 23(h) is unaffected by the application of
Rule 1:21-7. The Court expressly found in the alternative the
fee award was reasonable as a percentage of recovery of the
fund after deduction of costs. It did not abuse its discretion in
approving fees that represented 28% of the fund after
deduction of costs.
Chandra does not object to the 28% recovery on
substantive grounds. Rather, she argues that because class
counsel referenced the 25% figure in its Motion for
Attorneys’ Fees and Costs and the class notice, notice was
defective under Rule 23. The class notice stated “Class
Counsel will ask the Court for an award to cover costs and
expenses, as well as for a fee award of $2,504,250, or 25% of
the total amount recovered for the Classes.” In addition,
plaintiffs’ counsel’s Motion for Attorneys’ Fees was posted
on the class website, and also referenced the 25% of the total
amount figure.
Rule 23(h)(1) requires notice of a motion for
attorneys’ fees and costs “directed to class members in a
reasonable manner.” In this case, notice of the motion for
attorneys’ fees was provided to the class at the same time as
notice of the class action settlement. See NFL Players, 821
F.3d at 445 (noting Rule 23 contemplates “combining class
notice of the fee petition with notice of the terms of the
settlement” where practical). We have explained notice to the
class “should contain sufficient information to enable class
members to make informed decisions on whether they should
take steps” to object to the settlement and fees motion. NFL
Players, 821 F.3d at 446 (quotation omitted).
In this case, the class received notice of the critical
38
information—the amount of the attorneys’ fees sought—even
if the percentage stated in the class notice was slightly less
than the percentage of the fund after deduction of costs. Rule
1:21-7 affects the District Court’s Rule 23(h) analysis, but
does not mandate any particular form of notice to class
members under Rule 23(h)(1). The slightly different
percentage of recovery stated in the notice to the class did not
deprive the class members of the ability “to make informed
decisions” on whether to opt out of the settlement or object to
the fee award. See NFL Players, 821 F.3d at 446.
Because application of Rule 1:21-7 does not affect the
District Court’s analysis of the fee award and notice to the
class was sufficient, we conclude the Court did not abuse its
discretion in approving the fee award.
C. Costs
Chandra argues notice to the class of costs was
insufficient under Rule 23(h) because only the lump sum
amount of costs sought was included in the notice to the class
and details of the expenses were only provided to the District
Court in camera after the objections period. The class notice
did not include the amount of costs sought by plaintiffs’
counsel. The notice explained “it is estimated that each
eligible property would receive approximately $1,850 in
payment” but “[t]he exact amount of any final payment to the
property owners will depend on the Court's award of
attorneys' fees and expenses, costs of administration, and the
number of eligible members participating.” The amount of
costs sought was also included in class counsel’s Motion for
Attorneys’ Fees and Expenses, which was posted on the class
website. But the exhibits to that motion provided only limited
additional details, in the form of general categories of costs
39
included in the award.
At the fairness hearing, class counsel provided
additional details regarding the breakdown of costs.
Specifically, class counsel stated
[O]ut of the 1.1 million in costs that we have
asked to be reimbursed, about [$]700,000 of
that goes to experts . . . . About $83,000 went
for the costs of depositions. That is just the
transcripts, videos, just the nuts and bolts of the
depositions. We got about $120,000 in costs
related to document management, databases,
things like that . . . . We have legal research
which was over $30,000. We are going to have
other incidental costs of phone and travel, of
mediation costs.
Further documentation of the costs was then submitted to the
District Court in camera but not provided to class members.
The District Court approved $1,140,023.77 in costs for class
counsel, which included $1,085,869.58 in costs incurred in
pursuing claims against both Honeywell and PPG. The Court
accepted class counsel’s contention that all costs were
advanced by class counsel “in their effort to prosecute the
claims against Honeywell and PPG jointly.”
In addition, class counsel averred they “reserve [the]
right to seek reimbursement for such expenses should the
Class B case against PPG resolve to the benefit of the
plaintiffs.” Class counsel suggested they “may perform a
second distribution of expenses to the Class A and C
plaintiffs based on a recovery from PPG.”
40
Chandra’s main objection to the award of costs is the
inclusion of these expenses incurred in pursuing claims
against both Honeywell and PPG. She contends the expenses,
even if indistinguishable, should be apportioned equally
between the Honeywell and PPG classes. To this end,
Chandra argues that due process requires her to have the
opportunity to review itemized expense records from class
counsel.
We are not persuaded class counsel is required to
provide itemized expense records to objectors or to the class
generally to support the award of costs. But if an award of
costs is approved after in camera review of attorney time or
expense records, the District Court should provide sufficient
reasoning so there is a basis to review for abuse of discretion.
See Gunter, 223 F.3d at 196. The Court addressed Chandra’s
contentions regarding the expense award only in conclusory
statements, and provided no reasoning explaining its decision
to accept class counsel’s contention that commingled
expenses could not be separated or allocated proportionally
between the two classes. In addition, class counsel made no
formal commitment to repay the Honeywell classes
proportionally for expenses should the PPG litigation prove
successful. In this context, we will remand so the District
Court may articulate why the costs were reasonably incurred
in the prosecution of the case against Honeywell and to
address the issue of commingled expenses, including, if
appropriate, by requiring additional information from counsel
or the parties.
41
V. CONCLUSION
We will affirm the District Court’s decision to certify
the class for settlement purposes under Rule 23(a) and (b) and
to approve the settlement as fair and adequate under Rule
23(e). We will also affirm the District Court’s approval of the
award of attorneys’ fees under Rule 23(g). We will vacate and
remand the District Court’s approval of costs under Rule
23(g). In so doing, we express no opinion as to whether the
costs should ultimately be approved and in what amount.
42